Correlation Between Halma Plc and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both Halma Plc and Hanover Insurance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Halma Plc and Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Halma plc and The Hanover Insurance, you can compare the effects of market volatilities on Halma Plc and Hanover Insurance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Halma Plc with a short position of Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Halma Plc and Hanover Insurance.
Diversification Opportunities for Halma Plc and Hanover Insurance
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Halma and Hanover is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Halma plc and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance and Halma Plc is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Halma plc are associated (or correlated) with Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of Halma Plc i.e., Halma Plc and Hanover Insurance go up and down completely randomly.
Pair Corralation between Halma Plc and Hanover Insurance
Assuming the 90 days horizon Halma plc is expected to under-perform the Hanover Insurance. In addition to that, Halma Plc is 1.13 times more volatile than The Hanover Insurance. It trades about -0.1 of its total potential returns per unit of risk. The Hanover Insurance is currently generating about 0.06 per unit of volatility. If you would invest 14,500 in The Hanover Insurance on October 17, 2024 and sell it today you would earn a total of 200.00 from holding The Hanover Insurance or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Halma plc vs. The Hanover Insurance
Performance |
| Timeline |
| Halma plc |
| Hanover Insurance |
Halma Plc and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Halma Plc and Hanover Insurance
The main advantage of trading using opposite Halma Plc and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halma Plc position performs unexpectedly, Hanover Insurance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hanover Insurance will offset losses from the drop in Hanover Insurance's long position.| Halma Plc vs. NH HOTEL GROUP | Halma Plc vs. Park Hotels Resorts | Halma Plc vs. Singapore Reinsurance | Halma Plc vs. The Hanover Insurance |
| Hanover Insurance vs. Tokio Marine Holdings | Hanover Insurance vs. The Peoples Insurance | Hanover Insurance vs. W R Berkley | Hanover Insurance vs. Loews Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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